PNB to fund growth by selling assets, debt papers

Philippine National Bank (PNB) has opted to raise more capital and fund its expansion program by selling P10.5 billion worth of assets and debt papers, its president and CEO Eugene Acevedo said Tuesday. "We are going to put up 15 branches to 20 branches before the end of the year. We are also moving unprofitable branches to locations which make more sense," Acevedo said at the close of PNB’s annual stockholders’ meeting. The Lucio Tan-controlled bank also intends to set-up 158 automated teller machines (ATMs) and pursue its merger with Allied Bank, another part of the Lucio Tan group. PNB will sell P5 billion worth of acquired real estate and other properties. It has also offered P5.5 billion worth of unsecured subordinated debt qualifying as Tier 2 capital callable June 2016 with no step-up. The debt paper on offer may be increased if it is oversubscribed. PNB and ING Bank NV are the arrangers while First Metro Investments Corp. and Multinational Investment Bancorporation are the selling agents. PNB Capital and Investment Corp. and Allied Banking Corp. are limited selling agents. PNB deferred the debt paper offer after the Bangko Sentral ng Pilipinas imposed a moratorium on approvals of bank applications to issue Hybrid Tier 1 or Tier 2 capital. Acevedo said the proposed merger with Allied Bank is pending approval by the BSP and the Philippine Deposit Insurance Corp. He added that the merger will result in savings of P1 billion, but will also entail costs of P1 billion to P1.5 billion. Its earnings plunged 64 percent to P319.78 million in the first quarter of the year, largely on heavy losses in market-to-market valuation of investments securities. "One quarter does not make a year," Acevedo stressed. He said there are gains that may come from loans to consumers, which account for only 9 percent of the bank's total loan portfolio. PNB will also try to improve its profile of SME loans — currently 7 percent of the total. The bank also plans to raise its 2-percent share in the industry's total consumer loans portfolio to about 10 percent over the next four to five years. — ELR/VS, GMA News